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Are the Yankees really the most expensive team in baseball?

During game two of the World Series, as the Phillies’ Ace, Cliff Lee, was tying up the Yankees, I started working on a spreadsheet. It’s something I do when frustrated, since I can control the numbers better than I can A-Rod’s swing. Anyway, I pulled baseball numbers from all over the place, finding team values, payrolls, and revenue per team. As I played with the numbers and thought about the ever present “Yankees buy a World Series” allegations that are all the rage at this time of the year, I was a little surprised.

It’s true, their $201 million total salary expense is higher than any other team in baseball, with second place to the woeful Mets, who spent $149 million for  . . . well, only God knows why the Mets spent that much money on a team that finished 33 games behind the first place Yankees, and He’s not commenting. Third place in the salary ranking would fall to the Chicago Cubs, who spent $134 million for a losing season and the extension of their major league record 101 years of “wait until next year,” having won their last World Series in 1908. Yes, 1908, the year oil was discovered in the Middle East and Henry Ford produced his first Model T.

But  again, are the Yankees really an expense team?  

Baseball, in addition to being the greatest of professional sports, is also a business. And every business has to balance its payroll against two things: the annual revenue of the business and the business’s overall value. If you look at the Yankee’s payroll in light of those numbers, your perspective might change dramatically. In fact, the Yankee’s General Manager looks a lot less like a crazed McMansion owner from Long Island and a lot more like Warren Buffet driving his Ford across Nebraska.

In 2009, the Yankees were estimated to have an overall value of $1.5 billion. Their total revenue last year was $375 million. Both numbers are the highest in major league baseball. Actually, in any form of baseball known to us at this point in time. But in light of those two numbers, what does their salary line look like? How about one of the least expensive lineups in baseball?

If you look at their salary line compared to their value, the Yankees have $7.45 in value for every dollar they spend on salary. Only two teams have better numbers than the Yankees, the Florida Marlins at $7.52 and the San Diego Padres at $9.17. The league average is $5.49 in value for every dollar spent in salary. Compare that to the Detroit Tigers, who have a payroll of $115 million on a team value of $371 million. See how that works? Detroit has $3.22 in value for every dollar they pay, proportionately much more expense than the Yankees.

The other way to look at salary is to relate it to revenue. The Yankees had $375 million in revenue, which means that for every dollar they Yankees spent on salary, they had $1.86 in revenue, about the league average. The most expensive salary line when compared to revenue? Once again, the Detroit Tigers, who had $1.62 of revenue for every dollar spent on salary. The most efficient team? The San Diego Padres, who had $3.98 in revenue for every dollar spent on salary.

So are the Yankees players the most expensive team in baseball? On first glance, yes. But when you look again, certainly not. That honor would go to the Detroit Tigers or the Chicago Cubs, neither of which made the post-season. And just for World Series sake, what about the Philadelphia Phillies? Their team value to salary line is $4.39, much lower than the Yankees, which means more expensive. Their revenue to salary line is the exact same as the Yankees, $1.86.

Who gets the better value? We might just find out tonight, after game five in Philadelphia.

Comments

Determining true entertainment as a commidity is a futile exercise. What price would you be willing to pay for Damon's clutch double in Game 4? Or Arod's clutch hit in Game 3? Baseball operates in a gift economy. :)

Ahhh Ron! The comment of the year. You are right, baseball is full of art and beauty. Still fun to play with the numbers, though. : )

You're forgetting that baseball is NOT like every other business. It's a legalized monopoly which means in essence MLB is artificially subsidizing the inflated payroll of the Yankees by preventing good old free enterprise competition in its biggest market.

Yes indeed they paid there players much higher compared to the other team that is why players like to be in this team. - Weathershield Reviews

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About
Mark has been working in higher education for over 15 years. He has served as a professor, a dean, and a college president. He has consulted and taught in over thirty-five countries.


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